OREANDA-NEWS. February 07, 2009. TNK-BP, one of the major oil companies in Russia, will maintain its oil production at the level of last year or reduce it by up to 1%, German Khan, Executive Director of TNK-BP, said at a briefing held on February 7, reported the press-centre of TNK-BP.

“In current conditions, we will be able to maintain oil production at the level of 2008 with local drops within 1% and ensure revenues sufficient for fulfilling all our credit commitments and paying wages to employees and taxes to the regional budget,” said he.

According to the Central Dispatch Office of the fuel and energy complex, which monitors oil and gas production in the Russian Federation, TNK-BP reduced its oil production in 2008 by 0.9% compared to 2007 down to 68.8 million tons.

Mr. Khan stressed that “there is no critical oil price, because at least three parameters must be taken into account in the overall context – oil price, dollar/ruble exchange rate, and inflation.”
“A certain structure of these three parameters makes oil production cost-efficient and economically expedient. For this reason, even at a price of US9 per barrel and an exchange rate of 50 rubles per dollar we can remain stable and viable,” added he.

Mr. Khan noted also that the main emphasis will be placed on maintenance of oil production in mature fields and that the main programs of the company are focused on them.

“We are implementing the Uvat project, a new project in the Tyumen Region, in the framework of our agreements with the Administration of the Tyumen Region. We are going to open a new oil province in the southern part of the Uvat region in mid February and increase our oil production by approximately 2 million tons in this region,” specified he.

As the first step toward opening this new oil province, said Mr. Khan, the company will complete construction of a 284-km—long pipeline, which will connect a number of oil fields in the southern part of the Tyumen Region and enable development of these fields and construction of infrastructure for them.

In the Nizhnevartovsk Region, TNK-BP will continue its exploration and drilling works in mature fields and suspend operations in the least efficient areas.

“We have  no plans to cut jobs or lower production significantly. We have certainly curtailed our investment activities and will do our best to maintain the current production activities and volume in mature fields. This oil production volume generates the required cash flow, which is important to maintain in the current situation,” stressed Mr. Khan.

TNK-BP was established in 2003 by merging of TNK, SIDANCO, ONACO, and the BP assets in Russia and Ukraine. TNK-BP is engaged in exploration and production of oil in Western Siberia, Eastern Siberia, the Volga and Ural region, and Sakhalin Island. 50% of TNK-BP shares is owned by BP, and the other 50% of shares belongs to the Russian shareholders of the company (25% to Alpha Group of Mikhail Fridman, 12.5% to Renova of Viktor Vekselberg, and 12.5% to Access Industries of Leonard Blavatnik). The standstill agreement between the shareholders preventing them from selling their stakes in the company has expired on January 1, 2008.

The conflict between the Russian and British shareholders of TNK-BP publicly lasting for more than three months ended on September 4, 2008 by signing a memorandum of understanding that reflects all main issues and moot points between the shareholders, including resignation of the current President and Chief Executive Officer (CEO) of TNK-BP Robert Dudley, changes in the Board of Director of the company, organization of a initial public offering (IPO), and participation of TNK-BP in international projects.